People often lack the ability to make a decision and that can hurt their financial success.
Most of us are procrastinators. Even when we know what must be done, we delay doing it. Why this happens is a mystery. Or maybe we should just admit it is human nature.
Success is made up of two components. Knowing what to do and then doing it. Knowing what to do is theoretical and there is no gain with theory. The reward comes from completing the task.
Then when a decision is finally made you wonder what took so long. Rationalization would likely allow you to think you were not worse off by the delay.
Be careful of rationalization because that is the brain’s way of saying you are OK. Much of our cognitive natural mental process is meant to maintain the illusion that we have acted correctly.
Our ego needs to think we are rational and have acted correctly, but this is just a cover-up to the reality that we have not acted prudently. A first step is to be aware of our mistakes and make corrective adjustments on how we conduct our lives.
To illustrate making a mistake: what is the outcome of failing to make the correct turn while driving your car to a specific destination? You will likely still get to your destination but the cost will be time and gas.
Maybe you incorrectly set your car navigation system and ended up driving several hours before realizing your mistake. Most mistakes have a cost. Some are small but some are significant. This is true with financial mistakes that are made as a result of procrastination.
Procrastination can lead to a financial mistake by not focusing on debt reduction or not saving sufficient funds to allow you to reach your financial objectives. You might understand the theory that you should be proactive, but not doing what is needed to be done will cost you.
Perhaps your mistake is making an investment in a Tax Free Savings Account when it would be more beneficial from an income tax perspective to make a contribution to your Registered Retirement Savings Plan. You know you should check the tax implications of the two investment options but don’t.
Perhaps your mistake is not having a current Will with the correct executors for your Will or failing to have appropriate Power of Attorney for both health and financial matters. Most people know what they need and a lot fewer actually have their affairs in order.
It is not that these financial issues are that daunting. They are not. The culprit is procrastination and procrastination has a financial cost.
If the procrastination bug has caught you, what are some personal strategies to encourage you to get off the “proverbial fence”? There are several.
Question the things you do. Ask yourself if there could be an improvement in any area of your financial life. Make your own Top Ten list of what you could do now that would be beneficial.
Are you saving enough? Are your investments tax-efficient? Are your investment fees too high? Are you being paid fairly for the work you do in your employment? Should you start your own business?
Realize decision making is part of everyday life. People make decisions. Try and anticipate what decisions are ahead. For example, congratulations on having a baby! Do you realize a four year university degree will cost $100,000 in today’s dollars?
How can you assist your child with that cost unless you start now with a saving strategy, well in advance of when your child will potentially attend university? Families who have several children should be reminded that the cost of a post-secondary education is huge.
Often in life it is the simple things that matter. This same principle applies to just avoiding procrastination and if something is worth doing, then just do it.
Many areas of managing your financial affairs are very simple. Focus on the realities of what should be done and avoid the human tendency to procrastinate.